Preparing a budget template and presenting financial graphs using Excel

Transcription

1 Preparing a budget template and presenting financial graphs using Excel KLA: STAGE: UNIT: Topic: HSIE Stage 5 Commerce Personal Finance Budgeting, loans and insurance Outcomes: 5.1 Applies consumer, financial, business, legal and employment concepts and terminology in a variety contexts 5.5 Evaluates options for solving commercial and legal problems and issues 5.6 Monitors and modifies the implementation of plans designed to solve commercial problems and issues 5.7 Researches and assesses commercial and legal information using a variety of sources 5.8 Explains commercial and legal information using a variety of forms Learning Experiences Students set up a budget template that follows the formula; - Income Expenses (fixed + variable) = savings Students analyse the effect of different changes to income and expenses on savings by substituting values in their spreadsheet. Students format their spreadsheet to show the information in a professional manner. Students compare and contrast loans using the Internet for research Students compare and contrast car insurance by using the internet for research Students present these findings in graph form using Excel. Students become independent in working out how to transfer information to Excel Prior Knowledge Students should have started the Personal Finance core topic in the Commerce Syllabus and should have gained knowledge of these basic concepts. Most students should have basic Excel experience that has been done in Maths in Stage from Stage 2 onwards. They will need to use formulas to add, subtract, multiply and divide, as well as copy formulas to a range of cells. They will also need to format the spreadsheet template.

2 Teaching of unit This may be used as an assignment or an in-class set of activities which integrate the concepts of; - Budgets (Managing Finances) - Loans (Borrowing Money) - Insurance The three main aims of this unit are; 1/ Students learn how to work out a budget and set out a budget template using the formula; Income-expenses (fixed + variable) = savings. 2/ Students understand the difference between fixed and variable costs and how they affect savings 3/ Students see the additional costs involved in car loans as compared to their personal savings. The process of making a budget template should be demonstrated on Excel using a laptop and projector at the front of the class before the students begin, with the teacher going through each step of setting up the budget template up as follows; - Setting up the headings as per Excel file example - Adding in some values - Adding in the formulas to work out the budget - Formatting the columns aligning, formatting number values to accounting, adding in colour. - Showing them how to make a graph for the Activity 3: Comparing Loans. (see Excel file example)

3 Student Worksheet Scenario You have finished school (and post school training e.g. TAFE/UNI) and after working hard at your job for a few years, and saving $5,000 you think it s time you bought yourself a car! You have seen the car you have carefully chosen advertised for $17,000 drive away however you haven t got enough money to pay for it right now, so you need to make a decision; a) Should you save up for the car? or b) Should you take out a loan? If so, which one is the best? c) Once you work out how to get the car, which type of car insurance is the best? Since you studied Commerce in High School and know a bit about finance and loans, you are going to set out a budget template for yourself using an Excel spreadsheet, and compare 4 different personal loans using information from the internet. You are also going to research which is the best car insurance policy for you. Your finances You earn $42,000 p.a. (after tax). You live out of home and pay $200.00per week in rent and your electricity bill is $60 per month, and phone line rental and calls is $40.00 per month. You are on a monthly $79 cap mobile plan and your internet costs $40.00 each month. From your savings, while you were working, you already have $5, in a term deposit which earns 7% interest pa. You also budget to spend the following amounts each week on things for yourself; Clothes: $ ( this amount may not be spent every week and will rollover into savings) Entertainment: $ (including Pay for View television) Food kitty: $60.00 Eating out: $ Train ticket: $70.00 Taxis: $20.00 Contents insurance $15.00 Some of these amounts may change as you may not spend this amount on clothes and entertainment each week. You know the car you want and it costs $17,000 (drive away, no more to pay)

4 Activity 1 Prepare a weekly, monthly and yearly budget using Excel set out as follows; Income Less: Expenses (fixed and variable expenses should be listed under separate headings) = Savings Steps to take when preparing budget a) Set up a budget template following the formula above. A template is a basic format that can be used for all budgets. Below is an example of how you may wish to set up your budget template. MY BUDGET INCOME Wage from job Interest TOTAL INCOME Weekly Monthly Yearly insert formula EXPENSES Fixed Expenses Rent Electricity Phone (home) Mobile Variable Expenses clothes entertainment food kitty Eating out train ticket taxis contents insurance TOTAL EXPENSES SAVINGS insert formula insert formula

5 b) Enter in the values you have been given in the scenario take note of whether they are weekly, monthly or yearly c) Enter in formulas needed to convert figures to weekly, monthly or yearly where needed d) Enter the formulas to add and subtract the correct totals as per budget format. **Handy Hint 1** If you need to insert a row or column, right click on the row number/column letter in the spreadsheet border and go to insert. You can also delete this way **Handy Hint 2** You can copy a formula from one cell to another just by right clicking on the cell with the formula you wish to copy and choosing copy and then highlighting the the cell/s where the formula needs to go and choosing paste. Basic formulas needed for the budget template Adding Subtracting Multiplying Dividing = sum (highlight cells to be added) or can use the sigma symbol = cell reference cell reference = cell reference * cell reference = cell reference/cell reference Activity 2 Answer the following questions on your spreadsheet using formulas where required; a) How long will it take you save up for your car? Don t forget you already have some savings. b) How long would it take you to save up for your car if you received a pay increase of $5,000 pa? c) Which expenses could you cut down to save up for your car within a year? Do you think this is realistically possible? ( You will need to substitute various values in your spreadsheet, and look at the effect of these on savings to work this out) Activity 3 a) Use the internet to compare car loans from 4 of the major banks and write up a table in Excel showing the following information across the top, and the banks down the side column. Complete this table on a new sheet (sheet 2) at the bottom of your workbook. Rename this sheet Car loans by right-clicking on the sheet 2 tab and choosing rename. Bank Name - Variable Interest rate - Monthly repayments (you will need to use the loan calculator to work this out - Total interest payable this will be a formula - Application Fees - Ongoing monthly fees - Total amount repaid this will be a formula

6 b) Insert a graph to display this information underneath the table. You can do this very simply by; highlighting your table in the spreadsheet (including heading rows and columns) clicking on the insert tab at the top of your spreadsheet and choosing the graph style you think is appropriate (bar or column would be the best for this activity Formatting the graph with headings and labels as you see fit c) Insert a text box into the spreadsheet and explain which car loan you would choose and why. d) Now that you have worked out exactly how much extra money you need to pay if you get a loan as opposed to saving for your car you can answer the question: Do you want save up or get a loan for a new car? Write your answer to this in a text box in the spreadsheet explaining what type of things influenced your decision? Activity 4 What insurance is best for you? Work this out by using the internet to answer the questions below; a) What is the difference between comprehensive car insurance and compulsory third party insurance (CCP)? b) You decide it is best to get comprehensive car insurance. Compare the costs of 3 different insurance companies (eg AAMI, NRMA, Allianz, GIO) by going to their websites and getting an online quote using the following set of facts; Your address is where you currently live You park on the street You are 22 years old and have had your licence for 2 years The car you wish to purchase is a new current year model, manual transmission. Anything else that the quote asks you to fill in you can make up, as long as this is consistent throughout all three quotes c) Is there much difference between the 3 quotes? Present this information in a graph using Excel now you know how!

7 d) Do you think this seems a little expensive? Why do you think this could be? Hint: Try getting another quote, but change the information to say you have had your licence for 15 years and you are 34 years old. This is for comparisons only as it is fraudulent to provide incorrect information to an insurer.